The Pivotal Mechanism Versus the Voluntary Contribution Mechanism: An Experimental Comparison

Tatsuki Homma, Junyi Shen, Takuma Wakayama and Hirofumi Yamamura
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Tatsuki Homma: Graduate School of Decision Science and Technology, Tokyo Institute of Technology, Japan
Hirofumi Yamamura: Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan

No DP2018-23, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: We conduct an experimental comparison of two well-known mechanisms for undertaking a binary public project: the pivotal mechanism and the voluntary contribution mechanism. We compare the two mechanisms under complete information in which each subject knows the other subjects'payoffs. We then observe that the voluntary contribution mechanism works better than the pivotal mechanism from the perspectives of Pareto efficiency and individual rationality. On the other hand, we observe that the pivotal mechanism works better than the voluntary contribution mechanism in light of decision efficiency. These results suggest that whenever we insist on either Pareto efficiency or individual rationality, the voluntary contribution mechanism is more favorable than the pivotal mechanism in practical applications.

Keywords: Laboratory experiment; Pivotal mechanism; Voluntary contributionmechanism (search for similar items in EconPapers)
JEL-codes: C92 D71 D78 H41 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2018-11
New Economics Papers: this item is included in nep-exp
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https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2018-23.pdf First version, 2018 (application/pdf)

Related works:
Journal Article: The pivotal mechanism versus the voluntary contribution mechanism: an experimental comparison (2022)
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